Economic Opportunity

By Dennis Donohue

The economy of Salinas sometimes looks to be caught in an inescapable trap, one built from skyrocketing land costs, competition from cheaper labor markets, the decline of our primary industry and the flight of our best and brightest.

The simplistic solution: "economic development". The harsh truth: Our city government--like our county government--lacks the resources to solve this problem on its own.

That's because the problem is structural. A city government does not have the power--and ours lacks the money--to solve such a problem. Furthermore, a faltering economy starves the city government of tax revenue, weakening it further. Thus a faltering economy can set up a feedback cycle, similar to the cycle of decline that afflicts crime-plagued neighborhoods, discussed earlier. It is critical for us to understand and apply the systems-level solutions needed to break out of such feedback cycles. One-dimensional fixes can only chip away at parts of the problem.

Despite the seriousness of our present economic problems, I am full of optimism for our future. I believe that if we look again at those problems, we see that they are not only telling us what is going wrong, they are pointing towards what will go right.

In economic terms, our problems are telling us to "move up the value chain":

Land too expensive to grow our crops profitably?
Use the land for higher value purposes.

How to do these things? By realizing that the story of our future is The Salinas Valley Meets The Silicon Valley.

This does not mean that we pave over the Salinas Valley for chip and software companies. It means we can create the same environment for innovation and entrepreneurship found in Silicon Valley. And we use it to foster industries based not on silicon but on biology and agriculture. It happens that biology and agriculture are the areas of greatest future economic growth, and it happens that Salinas is ideally situated to benefit from that growth--if we recognize the opportunity.

In the 1920's and 30's, Salinas experienced a "green gold rush", which made it one of the wealthiest cities per capita in the United States. We are still riding the momentum from that gold rush, although we can see that it is faltering.

But there is another green gold rush coming, much larger than the first, and we can make sure it happens here.

The Industrial Revolution was driven by mechanical technology. The Information Age was driven by electronics. The future will be driven by biology. And here we are, sitting on some of the most fertile land in the world, in proximity to world class educational and research institutions, connected by road and wire to the rest of the most innovative state in the world.

That's why I'm optimistic. Here are just some of the opportunities waiting for us:

Biopharming & Neutriceuticals: The development of pharmaceuticals from farm crops, and of food crops that have recognized medicinal benefits.

Biofuels: Environmentally friendlier alternatives to petroleum that will also lessen America's dependence on foreign energy supplies.

Biomaterials: New classes of materials for fabrication and packaging of products, construction of buildings and more.

Pest resistant crops: Repelling pests without the use of pesticides.

Organics: One of the fastest growing retail sectors. With local growers already converting to organic, and with the recent opening of a US Department of Agriculture research station, we are already laying the groundwork to lead.

Although I am optimistic, I am also realistic, and I know that one city's mayor cannot promise to deliver on these opportunities all by himself. But I also know that if we unite around the vision, all of us working in concert will deliver them.

That's the power of a strong vision. If we all see it and share it, we will work together to make it real. Making this vision real will require participation from many parts of the community:

The city government
o By making Salinas a friendly place to set up innovative, entrepreneurial businesses. We cannot guarantee that any one business will succeed. But we can make it easy for many businesses to try.
o By forming partnerships with regional universities and research institutes.
o By supporting efforts to improve local schools, and encouraging post secondary institutions to train workers for the emerging industries.
o By enlisting co-operation with the county, state and federal governments.
o By serving as a clearing house and go-between for other stake-holders.
o By championing the vision.

Businesses
o By making investments in new ventures.
o By helping the public sector understand which public investments will pay the best dividends.
o By supporting the growth of the sector as a whole while competing as individual entities. This will include cooperative marketing, and shared research and infrastructure investments.
o By making donations to beneficial research.

Educational Institutions
o By training students for higher value jobs in the new economy.
o By establishing centers of excellence in biotechnology.
o By sharing research information with industry and government.

Public-Private Partnerships
Over the past few decades the developed world has learned that governments cannot pay for all the infrastructure and support services a society might need. But we have also learned that public-private partnerships can make up much or all of the difference. I believe in the power of such partnerships, which involve government, businesses and community groups--in particular when they have a clear strategic focus and are effectively managed. This is why as Board Chair of the Salinas Valley Chamber of Commerce I strongly supported the creation of a regional Tourism Improvement District.

Business Improvement Districts
The District would be funded by hotels and by revenues from the hotel occupancy tax, and would coordinate tourism marketing efforts by the county and our neighboring cities. Some were concerned that the city could not afford the roughly $46,000 it would have to contribute to the district. Luckily proponents carried the day. I agree with Amanda Holder of the Chamber's Tourism Task Force that Salinas will benefit form the region's improved ability to compete with other tourist destinations.

Our tourism effort is an example of a Business Improvement District (BID), a concept that originated in the 1970s with Bloor West Village in Toronto, Canada, and which has been proven successful across the US in New York, Philadelphia, Des Moines, Denver, San Diego and elsewhere. Another example is our own SUBA, the east side Salinas business improvement district. I support SUBA and will support future BID's that feature the same quality of focus and management. One idea I would like to explore is a "recreation district" in Alisal. In answer to the complaint that there is nothing for young people to do, we could give them plenty to do, all in one area: encouraging positive youth activities, discouraging negative ones, and boosting business and tax revenues at the same time.

According to an article in The Next American City magazine:

...the added tax levied by the BID not as an expense, but rather [is] an investment that will yield returns in the form of increased property values, revenues, and growth. Most BIDs make a good return on this investment, and very successful BIDs can become completely self-sustaining, eliminating any need to draw from the public coffers. In that situation, the city can reallocate any money budgeted for the BID's baseline services to a different line item, such as health services, education, or transportation. And as mentioned previously, a successful BID increases tax revenue through the growth in sales and economic activity, giving back to the public coffer.

Affordable Housing
I referred earlier to the role affordable housing plays in community safety, and to my belief that the absence of affordable housing is inhumane. Affordable housing is also critical to economic prosperity: if we can't house productive workers, we won't have productive workers.

Salinas is already doing more than any other city in the county to provide affordable housing for its residents, and doing it in ways that avoid sprawl development. Our current growth plan gives developers incentives to build affordable homes, and ensures that communities are a mix of single-family homes, apartments and condos near services, parks and transportation routes.

But given that Salinas remains in a housing affordability crisis, we clearly need to do more. I strongly support more housing for Salinas, including a high proportion of affordable housing.

I'm proud to be supported both by responsible developers like Creekbridge Homes and Don Chapin, and by environmentalists such as City Councilmember Jyl Lutes, who worked with Creekbridge to develop an award-winning example of how new housing should be built, bringing developers, housing advocates and environmentalists to the same table to do what's right for residents, the economy and the environment.

We will not be able to do solve our housing crisis on our own. When we build affordable housing, we give up property tax revenue. Other communities that are not as proactive do not incur this cost. We must work in partnership with the county, the state, developers and local businesses, leveraging both government programs and the increased prosperity that will be generated by removing the brake that unaffordable housing puts on economic growth.

Drawing On The Best Available Knowledge
I am consulting with a team of advisers to help me with this plan for Salinas' economic future. They include Luis Alvarez, President, Alvarez Technology; Jack Harvey, an executive with HSBC Bank; Peter Kasavan, President, Kasavan Architects; Sharan Lanini, Agricultural Consultant; and former General Motors executive Sharon Sarris, President, Greenfuse Consulting.

I believe we can make this vision real, and I know that if we do, we will escape the current trap of strained budgets, over-extended services, high cost of living and loss of businesses, jobs and talent. A prosperous economy will fund healthy city services, which in turn will enable greater prosperity. And so the negative feedback cycle will become a positive feedback cycle: an upward spiral.